Strategic Marketing

1. Imperatives for Market-Driven Strategy

2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
 CHAPTER 6
Market Targeting and Strategic
Positioning

Market Targeting Strategy

Targeting in Different Market Environments
Positioning Strategy
Developing the Positioning Strategy
Determining Positioning Effectiveness

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies,

 MARKET TARGETING STRATEGY

The Marketing Targeting Decision Identities the

People or Organizations in a Product-Market
Toward Which a Firm Directs Its Positioning
Strategy Guided by an understanding of:

•The product-market
•Its buyers
•Firm’s capabilities resources
•Competition

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 Market Targeting and Strategic
Positioning
* Core dimensions of market-driven
strategy: deciding which buyer’s to
target and how to position the firm’s
products

* Effective targeting and positioning

strategies are essential in gaining and
sustaining superior performance
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SEGMENTS

VALUE
OPPORTUNITES

CAPABILITIES/
SEGMENT
MATCH

TARGET(S)

POSTIONING
FOR EACH
TARGET
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Identify segments within the product-market

TARGETING
AND
POSTIONING
Decide and
implement a
Decide which
positioning
segment(s) to
strategy for
target
each targeted
segment
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 Market Targeting Alternatives
Segments Clearly Defined

Target Target
Selected Multiple
Selective Niche(s) Segments Extensive
Targeting Product Product Targeting
Specialization Variety

Differentiated But Segments

Not Clearly Defined

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 Factors Influencing Targeting Decisions
* Stage of product – market maturity

* Extent of diversity in preferences

* Industry structure

* Capabilities and resources

* Opportunities to gain competitive

advantage

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TARGETING IN DIFFERENT MARKET
ENVIRONMENTS

 Emerging

 Growing
 Mature
 Declining
 Global

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 Emerging Market
Buyer Diversity
* Segmentation limited due to similarity of buyers’
preferences
Industry Structure
* Typically small new organizations
* Limited access to resources
Capabilities and Resources
* Unique benefit (differentiation) strategy rather
than low-cost
* First-mover advantage
Targeting Strategy
* Single target or a few broad segments

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 Growth Market
Buyer Diversity
* Segments should exist
Industry Structure
* Numerous competitors
Capabilities and Resources
* Survival requires aggressive actions by firms that seek large
market positions
* Otherwise select one or a few market segments
Targeting Strategy
* Three possible strategies
1. Extensive market coverage by firms with established
businesses in related markets
2. Selective targeting by firms with diversified product portfolios
3. Very focused targeting strategies by small organizations
serving one or a few market segments.
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 Mature Markets
Buyer Diversity
* Segmentation essential for competitive advantage
Industry Structure
* Intense competition for market share
* Emphasis on cost and service, and pressures on profits
Capabilities and Resources
 Management’s objectives: cost reduction, selective
targeting, product differentiation
Targeting Strategy
 Deciding which segment to serve
 Firms pursuing extensive targeting strategies may decide
to exit from certain segments
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 Global Markets
Global Reach and Standardization
* Identify market segments that span global markets and
serve these needs with global positioning strategies
Local Adaptation
* Consider requirements of domestic buyers
* Buyers’ needs and preferences affected by social, political,
cultural, economic, and language differences
Industry Structure
* Restructuring, acquisitions, mergers, and strategic
alliances altering industries and
competition
Targeting Strategy
* Targeting a single country, regional (multinational)
targeting, or global targeting
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 GLOBAL Successful British Retailer Tesco
FEATURE Enters the U.S. Market
Tesco announced plans to open a chain of convenience stores on the U.S.
West Coast in 2007, spending an estimated $453 M. The very successful
retailer has four types of stores, including the convenience chain, Tesco
Express.

This initiative is being launched even though the U.S. retail grocery market
is experiencing intense competition, and some chains are cutting back or
selling out.

Tesco’s decision to enter the U.S. convenience market is bold and risky.
Some authorities consider the action questionable. However, Tesco has a
very impressive success record in Britain. With its Tesco Express, Tesco
Metro, Superstore, and Extra hypermarkets, the giant retailer has dulled
Wal-Mart’s drive to dominate the retail scene.

Tesco has no brand awareness in the U.S. so building brand identity will be
challenging. Yet the retailer has global buying power, powerful
information technology, and strong supply chain capabilities. The stores
will offer groceries, produce, and private-label ready-to-eat meals. Some
Source: Kerry Capell, “Tesco: California Dreaming?” BusinessWeek, February 27, 2006, 38.
observers think Tesco is planning to compete with Wal-Mart in its home 6-14
 POSITIONING STRATEGY

Deciding the desired perception/

association of an organization/ brand by
market target buyers…and designing the
marketing program to meet (and exceed)
buyers’ value requirements.

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 STRATEGIC POSITIONING
INITIATIVES
POSITIONING
CONCEPT
The desired positioning of the
product (brand) by targeted buyers

MARKET
TARGET
POSITIONING POSITIONING
EFFECTIVENESS STRATEGY
How well The combination of
management’s marketing actions
positioning objectives used to communicate
are achieved for the the positioning concept
market target to targeted buyers

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 How Positioning Works
* Objective
* Match the organization’s distinctive capabilities with
the customer value requirements for the market target
(How do we want to be perceived by targeted
buyers?)
* Desired result
* Gain a relevant, distinct, and enduring position by the
targeted buyers that they consider important.
* Actions by the organization
* Design and implement the positioning strategy
(marketing program) for the market target.
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INNOVATION Spotting Shifts in Demand in
designing Hennes & Mauritz (H&M)
FEATURE Apparel
It’s 1:30 p.m. on a Monday in the bustling H&M store on Manhattan’s
fifth Avenue, and Alma Saldana, a 28-year-old makeup artist from
Houston, is stuffing three tiny vests into her black Y&M shopping bag.
That’s on top of blouses, jackets, and pants. Saldana is in a buying
frenzy. This is her first visit to H&M, the Stockholm-based fashion
retailer, and it’s everything she had hoped for. “Somebody told me you
find great fashion at a very cheap price, and it’s true!” she exclaims.

Such enthusiasm has made H&M one of the hottest fashion companies
around. Central to its success is its ability to spot shifts in demand and
respond with lightning speed. While traditional clothing retailers design
their wares at least six months ahead of time, H&M can rush items into
stores in as little as three weeks. Most of the work is done ahead, too.
But when it sees consumers scooping up something like vests, it speeds
a slew of new variations into stores within the same season, to the
delight of shoppers like Saldana. “Speed is important. You need to
have system where you can react in a short lead time with the right
products,” says Chief Executive Rolf Eriksen. 6-18
How does it work? H&M designers had included a couple of cropped
vests in their autumn/winter collections. In august, shortly after the
vests went on sales, they started “flying out of the stores,” say
Margareta van den Bosch, H&M’s head of design. H&M’s designers in
Stockholm (it has more than 100) spotted the trend in the company’s
worldwide sales reports, published internally every Monday. About half
of them immediately started sketching new styles. As quickly as
designs came off their desks, pattern makers snipped and pinned,
pressing employees into service as live models. At the same time,
buyers ordered fabrics. The designs were zoomed electronically to
workers at H&M’s production offices in Europe and Asia, which then
selected manufacturers that could handle the jobs quickly. In less than
two months most H&M stores had 5 to 10 new vest styles in stock.
One of the secrets to H&M’s speed is decisiveness. The people in
charge of each collection can dream up and produce new fashions on
their own authority. Only huge orders require approval from higher
ups. “We have a flat organization. We have a shorter way to a
decision,” says Sanna Lindberg, president of H&M Hennes & Mauritz
Source: Steve Hamm, “SPEEDDEMONS,” BusinessWeek, March 27, 2006, 70-71. 6-19
The Perception or Association that Management Wants
Buyers to Have Concerning the Brand

Symbolic Functional

SELECTING THE
POSITIONING
CONCEPT

Experiential

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 DEVELOPING THE POSITIONING STRATEGY

The Positioning Strategy Places the

Marketing Program (mix)
Components into a Coordinated
Set of Actions Designed to
Deliver Superior Customer
Value
PRODUCT
VALUE
PROMOTION
CHAIN
PRICE

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 Positioning Issues
1. The positioning concept applies to a
specific brand rather than all the
competing brands that compose a
product classification
2. The concept is used to guide positioning
decisions over the life of the brand
3. Multiple concepts are likely to confuse
buyers and may weaken the effectiveness
of positioning actions

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The positioning strategy indicates how (and why) the product
mix, line, or brand is to be positioned for each market target.
This strategy includes:
•The product strategy, indicating how the product(s) will be positioned
against the
competition in the product-market.

•The value chain (distribution) strategy to be used.

•The pricing strategy, including the role and positioning of price relative to
competition.

•The advertising and sales promotion strategy and the objectives these
promotion
components are expected to achieve.

•The sales force strategy, direct marketing strategy, and the Internet
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 DETERMINING POSITIONING
EFFECTIVENESS

The marketing offer (product,

distribution, price, and promotion)
is both distinct and valued in the
minds of the customers in the
market target.

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Customer and Competitor Research

Methods for
Determining
Positioning
Effectiveness

Analytical Test Marketing

Positioning
Models
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Customer and Competitor Research
* Research Studies
* Preference Maps
Test Marketing
* Generates information about commercial feasibility
and marketing program
* Provides market (sales forecasts) and effectiveness
measures
Positioning Models
* Incorporates research data into formal models of
decision analysis
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 Positioning Errors
* Under-positioning – customers have only
vague ideas about the company and do
not perceive anything distinctive about it
* Over-positioning – Customers have too
narrow an understanding of the company,
product, or brand
* Confused positioning – Frequent changes
and contradictory messages confuse
customers
* Doubtful positioning – claims made for the
product or brand are not regarded as
credible
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 Positioning in Perspective

* Positioning is a central part of business strategy

* Positioning analysis starts with an understanding of the
value proposition for the target segment
* Value-driven positioning is the objective
* Positioning seeks to differentiate the organization’s offer
from the competition
* Positioning seeks to create a unique perception in
buyers’ minds of the target market segment
* Positioning is the unifying dimension of market-driven
strategy

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Positioning usually means that an overt decision
is being made to concentrate only on certain
segments. Such an approach requires
commitment and discipline because it’s not easy
to turn your back on potential buyers. Yet, the
effect of generating a distinct, meaningful
position is to focus on the target segments and
not to be constrained by the reaction of other
segments.

Source: Aaker and Shansby, Business Horizons, May-June 1982, 61.

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 Illustrative Impacts of Changes in Business Strategy on
Targeting and Positioning Strategies
Changes in Business Market Targeting Impact
Strategy Positioning Impact
Rapid Growth/ Market scope may not change Substantial changes in resource
Retrenchment although targets may be allocation, (e.g. advertising
increased or reduced. expenditures

Changing the Product No change is necessary unless Changes in product strategy, methods
Mix increase in product scope creates of distribution, and promotional
opportunities in new segments. strategies may be necessary.

Changing the Market Targeting is likely to change to Positioning strategy must be

Scope include new targets. developed for each new target.

Repositioning Should not have a major effect on Product, distribution, price, and
targeting strategy. promotion strategies may be
affected.
Value Chain Should have no effect on targeting Primary impact on channel, pricing
Integration strategy. and promotion strategies.

Diversification Targeting strategies must be Positioning strategies must be

selected in new business areas. developed (or acquired for the new
business areas.
Strategic Alliance Targeting strategy may be affected Operating relationships and
based on the nature and scope of assignment or responsibilities must
the alliance. be established.
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 Targeting and Positioning
Product
Strategy

Positioning
Strategy
Promotion Distribution
Strategy Strategy
Market Target

Price Strategy

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